Question

the phrase " auditing standards generally accepted in the United states of americe" can be found in the opinion paragraph of a standard, unqualified audit report for a public company.

a.false
b.true

Answer 1

Statutory Audit

During the statutory audit, the auditor reviews the processes and procedures by which your company prepared the financial information presented in your reports. That is, the auditor has to check whether the preparation of the company’s financial reports is aligned with generally acceptable accounting principles (GAAP) or other applicable reporting frameworks (e.g., IFRS, UK GAAP, etc.).

In the United States, publicly listed companies are required to have an audit of their financial statements. After collecting substantial information, an external auditor issues a statement or an opinion with regard to the quality or integrity of the company’s reported financial information.

The Types of Audit Reports

The four types of audit reports that are given by external auditors:

1. Unqualified Opinion
   
   If your company gets this opinion, that's a good thing. An unqualified opinion indicates that the information presented in a company’s financial report is clean. As in a medical patient’s clean bill of health, an unqualified opinion shows that the audited financial statements can be presumed to be free from misstatements.
2. Qualified Opinion
   
   An opinion rendered in a qualified audit report is similar to an unqualified opinion; however, the auditing body cannot express an unqualified opinion for several reasons. One reason could be that the company did not present its financial records in accordance with GAAP.
   
3. Disclaimer Opinion
   
   Auditors give a disclaimer when they are unable to express a definite opinion. This can be due to the lack of properly maintained financial records or the absence or insufficient support from the management. For instance, an auditor may not have had the opportunity to fulfill tasks that they deem to be crucial to the audit, such as observing operational procedures or reviewing particular procedures.
   
4. Adverse Opinion
   
   When auditors issue an adverse opinion, it indicates that there has been a gross misstatement and, possibly, fraud, in the preparation of the company’s financial records. An adverse opinion shows that the company’s records have not been prepared in accordance with GAAP. Financial statements with adverse audit opinions are typically rejected by financial institutions or investors.

Statement on Auditing Standards provide guidance to external auditors on generally accepted auditing standards (abbreviated as GAAS) in regards to auditing a non-public company and issuing a report.

Generally Accepted Auditing Standards, or GAAS are sets of standards against which the quality of audits are performed.

In the United States, the Public Company Accounting Oversight Board develops standards (Auditing Standards or AS) for publicly traded companies since the 2002 passage of the Sarbanes-Oxley Act; however, it adopted many of the GAAS initially. The GAAS continues to apply to non-public companies.

Answer is False, as the GAAS is not applicable to public company thus, the phrase " auditing standards generally accepted in the United states of americe" will not be found in the opinion paragraph of a standard, unqualified audit report for a public company.